Long Beach council OKs pension reform deal projected to save millions

LONG BEACH - The city will save $125.5 million over the next decade following approval of a pension reform deal with the city's largest union Tuesday.

In an 8-1 vote, the City Council approved an agreement with the 3,600-member International Association of Machinists and Aerospace Workers that combines higher employee retirement contributions with reduced benefits for future employees that officials say will save $2.5 million in Long Beach's general fund and $7.6 million in all funds for the current fiscal year ending Sept. 30.

The city's general fund deficit for the 2014 fiscal year is estimated at $10.9 million.

Members of the union endorsed the contract changes last week.

Councilman Gary DeLong cast the lone vote against the agreement. DeLong didn't explain his decision during the council meeting, but later emailed a statement to the Press-Telegram.

"I voted against extending the IAM contract because it will result in continued service reductions for Long Beach residents," DeLong said. "We should begin negotiating with the IAM immediately, and have a new agreement ready to go when the existing contract expires in 9 months, and not extend a bad agreement. The new agreement should ensure that the City pays our employees no more than we can afford."

Mayor Bob Foster lauded the deal last week following the union's endorsement as a money-saver that "creates a more sustainable system for the future."

The approved agreement goes into effect Jan. 26 and is the endgame of three years of negotiations between the city and various unions.

In 2011, the city's other two major unions, the police and firefighter associations, agreed to reforms that are projected to save $100 million by 2022.

Starting next year and for eight more years, the annual savings from the IAM agreement are estimated at $3.8 million for the general fund and $11.8 million across all funds. Officials say the deal will save the city $125.5 million over the next 10 years.

Current workers will pay 6 percent more of their salaries toward retirement costs, an increase from 2 percent to what is considered a full employee share of 8 percent, while continuing to receive 2.5 percent of their pay as pension for each year worked and being able to retire at age 55.

Employees hired after Jan. 1 will contribute 7 percent of pay toward their pensions, receive 2 percent as pension for each year on the job and reach retirement eligibility at age 62.

The union also negotiated an extension of its current contract, to Sept. 30, 2014, and a guarantee that no more employees will be laid off this fiscal year.